What remedies are the plaintiffs seeking in the Ira Lubert and John Martinson case against Ledgers?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Ira Lubert and John Martinson v. John T. Hewitt, ATAX, LLC, and Loyalty, LLC (Case No 250503829) filed May 30, 2025, in the Court of Common Pleas of Philadelphia County, Pennsylvania. The Plaintiffs are investors in ATAX, LLC, and claim that they were solicited to invest in ATAX as a qualified opportunity zone business (QOZB), yet it did not qualify as a QOZB. Further, Plaintiffs claim that, as a result of the non-QOZB status, the defendants promised certain changes, some of which defendants have not made, specifically an amendment to ATAX's Operating Agreement and certain financial controls. The Plaintiffs also allege that Hewitt, with the assistance of certain Loyalty employees, made cash withdrawals from ATAX and paid those funds to himself, to Loyalty, and to other Loyalty brand companies without ATAX Board approval. The Plaintiffs sue for (1) Fraud Against Defendant Hewitt, (2) Aiding and Abetting Fraud (Against Defendant Loyalty), (3) Breach of Fiduciary Duty (Against Defendants Hewitt and Loyalty), (4) Conversion (Against Defendants Hewitt and Loyalty), (5) Breach of Contract (Against Defendants Hewitt, Loyalty, and ATAX), (6) Unjust Enrichment (Against Defendants Hewitt and Loyalty), (7) Breach of Virginia Stock Corporation Act (Against Defendants Hewitt and Loyalty), and (8) Violation of Pennsylvania Voidable Transfers Act (Against Defendants Hewitt and Loyalty). Plaintiffs seek a judgment, an order rescinding their investments, redemption of their ownership interests at a fair value, monetary damages in an amount to be determined at trial, fees, and interest. Defendants offered to buy out the Plaintiffs' investments for a profit that would be beneficial to Plaintiffs. Defendants intend to file an Answer generally denying the allegations and vigorously contesting the claims made. No trial date has been set.
Source: Item 3 — LITIGATION (FDD pages 11–16)
What This Means (2025 FDD)
According to Ledgers's 2025 Franchise Disclosure Document, in the case of Ira Lubert and John Martinson v. John T. Hewitt, ATAX, LLC, and Loyalty, LLC, the plaintiffs are seeking several remedies. This case, filed on May 30, 2025, involves investors in ATAX, LLC, who claim they were solicited to invest in ATAX as a qualified opportunity zone business (QOZB), but it did not qualify as such. The plaintiffs allege that promises were made to rectify this, including amendments to ATAX's Operating Agreement and certain financial controls, which were not fulfilled. They also claim that Hewitt made unauthorized cash withdrawals from ATAX, benefiting himself, Loyalty, and other Loyalty brand companies without ATAX Board approval.
The plaintiffs are suing for multiple causes of action, including fraud, aiding and abetting fraud, breach of fiduciary duty, conversion, breach of contract, unjust enrichment, breach of the Virginia Stock Corporation Act, and violation of the Pennsylvania Voidable Transfers Act. As a result, the plaintiffs are seeking a judgment against the defendants. They are also requesting an order to rescind their investments, which would essentially undo their initial investment. Additionally, they want the redemption of their ownership interests at a fair value, which means they want to be bought out at a price determined to be equitable.
Beyond these equitable remedies, the plaintiffs are also seeking monetary damages, the specific amount of which will be determined at trial. They are also seeking to recover their legal fees and interest on any amounts awarded. It is important to note that the defendants have offered to buy out the plaintiffs' investments for a profit, which the defendants believe would be beneficial to the plaintiffs. The defendants plan to deny the allegations and vigorously contest the claims. As of the FDD's publication, no trial date has been set. This ongoing litigation could have implications for prospective Ledgers franchisees, particularly concerning the financial stability and management practices of related entities and key personnel.